Renegotiation of Australia’s Bilateral Investment Treaties
Submission
The International Institute for Sustainable Development (IISD) urges Australia's Department of Foreign Affairs and Trade to prioritize the termination of old-generation treaties that lack modern safeguards and to pursue a new generation of treaties focused on current policy problems, cooperation, shared prosperity, and transparency.
Recommendations
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Treaties can serve as platforms for international cooperation to address collective action problems that states cannot solve on their own. Future treaty frameworks should prioritize investments that contribute to climate mitigation, adaptation, and a just transition.
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Treaties must go beyond merely protecting capital and instead focus on strengthening the host state’s capacity to reap long-term benefits. They should facilitate productive industrialization, local economic linkages, technology and knowledge transfers, and the creation of decent work.
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A reimagined treaty regime should move away from providing blanket protections that override domestic regulation and instead focus on the interaction between international law and national regulation, recognizing national law as the primary regulator.
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Transparency is a cornerstone of sustainable investment. Treaties should foster public accountability and beneficial ownership registries.
IISD welcomes this opportunity to provide input on the renegotiation of Australia’s older-generation bilateral investment treaties (BITs) with Czechia, Egypt, Hungary, Lithuania, Poland, and Romania. These treaties, concluded in the 1990s and early 2000s, are based on an outdated model that prioritizes investor protection and investor–state dispute settlement over contemporary public policy objectives. IISD recommends a fundamental shift: proactively reimagining treaties as tools for sustainable investment governance.
Modern treaties should be proactively designed to solve today's governance challenges rather than being reactive to the failures of the past. IISD calls for a broader rethinking of the function of investment treaties that starts from the formulation of the policy problems that need addressing, rather than shoehorning solutions onto the outdated investment protection model. There are numerous problems that a modern investment treaty could help solve for Australia, its treaty partners, the planet, and its people.
Australia has a unique opportunity to lead by transitioning away from the outdated BIT model toward a regime that actively facilitates sustainable development. We urge the Department of Foreign Affairs and Trade to prioritize the termination of old-generation treaties that lack modern safeguards and to pursue a new generation of treaties focused on cooperation, facilitation, impact regulation, and shared prosperity.
